Driven to win

Steve Kelleher, Hyundai Auto Canada Corp. chief executive, makes no bones about the fact that when he joined the Korean automaker 26 years ago he would never have thought it would be in the position it is today. Hyundai now has three of the top 10 selling passengers cars in the country, more than any other automaker, and its new Elantra is within spitting distance of overtaking the Honda Civic this year as the best selling car in the country, a title Honda has held for 13 years running. But it was no accident that Hyundai has found itself here. Mr. Kelleher spoke with the Financial Post’s Scott Deveau about what got the automaker where it is today. This is an edited version of that discussion.

Is the Elantra going to outsell the Civic this year?

I hope so. But that’s a tough question to answer. The Elantra is doing everything we thought it would, and more.

What would that mean psychologically for you?

It would be the cherry on the top. But, I’ll tell you, it has already been a big psychological boost for us. Just the fact that it has done so well. It’s not unexpected. We really did, when we brought it out, feel that it was going to have a shot at being at the top of the segment. Let alone, the top of the industry. To do the numbers we’ve done sort of shows the company’s progress, and says we’re a top-tier manufacturer.

How did Hyundai go from its traditional role of being a ‘value vehicle’ to where it is today?

It took a while. It wasn’t overnight. It was a pretty simple process, but hard to do. The first was to make sure that our quality component was there. That took a long while, and we got it to the point where we weren’t just on a level playing field with everyone, we started to show up on the top of the J.D. Power charts. That’s something we had to do – and everyone has to do in the industry now – because it’s an entry car. I have to give our chairman a lot of credit for that. He made that happen when he took over the company. He made quality the mantra. But we did that in a relatively short period of time. The biggest thing that has happened for us in the past three years, and in particular this year, was not only provide our customers with a quality vehicle, but we started to provide them with features that exceeded their expectations at an accessible price. So, the value was there.

How did you get over some of the hurdles convincing the Canadian market this was a different car company?

The biggest factor in that has been our new design. That really has swung a lot of people. We used to be the rational company. People would buy us because of the value, and it was more about this being the right car to buy because it’s practical. Now, we’ve gone from rational to aspirational and emotional. That, I think, was the biggest step for the company. People want to drive an Elantra now because it looks so good and they feel good driving it. Where our previous generation Elantra was a “me too.” It wasn’t distinctive. Yeah, it was a good value. It was a good quality vehicle, but it didn’t stand out. There was no reason for consumers to pick an Elantra over another vehicle, except it was a good deal. We’ve changed that now. People want to buy it.

Do you think Korean automakers have finally come of age?

Yeah, I do. That is born out by the sales results and the number of people who are shopping for them in the country. We’ve been in the country for 26 years, and we got off to a shaky start. Let’s face it, we had to grow up as a company and we had some quality issues way back when, and it takes a long time to overcome that quality perception and reliability perception with the consumer. That’s was a constant battle we were faced with to try to turn that corner, and we did. Now, I think, with the types of conquest sales we’re getting, we’re seeing a lot of Toyota, Nissan, Honda owners trading their vehicles in for Hyundais. That wasn’t the case three years ago.

How much have the quality issues at Toyota last year, and the supply issues at it and other Japanese manufacturers this year helped you?

Well, obviously, when they don’t have product, it’s an advantage for us. But, I will say, we were seeing a swing well before there was the disaster in Japan. I think, yes, for a period of time it certainly helped. But the momentum was there before the earthquake.

Was the momentum there before the quality issues arose at Toyota?

Yes, it was. I will say it really picked up speed when we launched our new design. That’s when it really took off. That started with our new 2010 Tuscon [in late 2009]. That was the first all-new vehicle we had with the all new fluidic sculpture design.

What’s the next step then for you? How do you take Hyundai to the next level?

We want to continue to go up. There’s lots of things we have yet to accomplish. I think we’re going to finish this year ahead of Honda. Certainly, we would like to go up another notch and we’re certainly hoping we can get to Toyota’s level of sales someday. We have goals in mind, but we want to do it in a logical and rational manner. It means bringing out something like the Veloster. We had never really ventured into bringing out a unique, niche vehicle. And so, I think that’s good for the brand. But I think we need to be careful about what we’re doing and not get into some segments too early where it could impact our focus on the mainstream segments we’re already in. Pickup trucks are something everyone is asking us about. Is it too early? Maybe. Let’s make sure we get all our ducks in a row on the product we already have in the market and really succeed with those first.